I’m the Executor of an Estate – and I have no idea what I need to do!

Mom just passed away and the entire family is mourning. However, in addition to being a daughter, you have also been named executor of Mom’s estate. You know there is much to be done, but honestly you don’t know exactly what the job entails. Very simply, you are responsible for collecting Mom’s assets, paying creditors and distributing the remaining assets as her will instructs.

Now, let’s look at some detail to those tasks.

  1. Review Mom‘s will. Pay particular attention to the sections dealing with beneficiaries, the distribution of property, and fiduciary’s powers. Determine if the assets are to be distributed, or if they are to remain in trust for later distribution to the beneficiaries.
  2. Determine how all assets are titled and who the named beneficiaries are; that will determine how and to whom those assets will ultimately be distributed.
  3. It is your responsibility to preserve the assets. That means secure the residence and personal property. Do not distribute or dispose of assets, by sale or otherwise, until you have met with an attorney. Often assets have significant income tax consequences upon their liquidation or payment, e.g. IRA’s, annuities, to name a few. There is also an order of priority to claims against the estate that the attorney can advise you as to your legal responsibility.
  4. Notify Social Security, if the funeral home has not done that already, as well the Veterans Administration if necessary, and credit card companies. Insurance companies need to be notified as well, both life insurance and homeowner’s insurance. Remember, homeowners or rental insurance will need to continue. Make sure you are getting all the bills so you don’t miss these.
  5. Prepare a list of all assets of the estate including values as of the date of death. This is necessary if assets need to be probated as the Court requires such an inventory. It is also necessary to determine a new cost basis for these assets in order to take advantage of the “step-up” in basis to minimize the taxable gain when the assets are sold. Finally, this will determine if a federal estate tax return will need to be filed (if your estate exceeds $5.43 million).
  6. A new taxpayer identification number is necessary for the period of time that the estate is being administered.   If the estate thereafter has taxable income exceeding the required minimum, it will be necessary to file IRS Form 1041, the estate’s income tax return. You are also responsible for filing a final personal income tax return for the decedent.
  7. Review and pay the bills. Review any bills that the decedent may have owed and pay them in the order of priority. The attorney can advise you of this priority which is established by statute.
  8. Once the creditor claim period for the estate has passed and after all the bills and the expenses of administering the Estate have been paid, the final step is to distribute the remaining property in accordance with the decedent’s wishes. It may be appropriate to sell some assets and distribute the cash to facilitate equal division among heirs, provided this is in accordance with the will.

There will probably be many other tasks to be done during the administration of an Estate, many of which involve legal, financial, or tax issues. It is recommended that you work with a counselor and the other members of a planning “team” such as a CPA, insurance agent, and financial advisor. Beyond legal services, other professional advisors have valuable roles to play in the administration of an estate. We urge you to seek their assistance.

Remember, you have been named as Executor so you are responsible for getting all of these tasks completed, very typically with the help of your “team.”